Table 5.2 shows the change in the quantity demanded for Good A and Good B as a result of the change in their price. Use the information in the table below to calculate the value of the price elasticity of demand for Good B. Table 5.2

Quantity
Price
Good A

100
$10
120

$ 9
Good B
200
$20
140
$35
A)−2/3
B)−1/6
C)−1/2
D)−11/17
E)−17/11

Question

Table 5.2 shows the change in the quantity demanded for Good A and Good B as a result of the change in their price. Use the information in the table below to calculate the value of the price elasticity of demand for Good B.​ Table 5.2
​
​
Quantity
Price
Good A
​
100
$10
120
​
$ 9
Good B
200
$20
140
$35
A)−2/3
B)−1/6
C)−1/2
D)−11/17
E)−17/11

Quizplus · Accepted Answer

The price elasticity of demand for Good B is calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the quantity demanded for Good B decreases from 200 to 140, a decrease of 60 units. The price of Good B increases from $20 to $35, an increase of $15. Therefore, the percentage change in quantity demanded is -60/200 = -0.3, and the percentage change in price is 15/20 = 0.75. The price elasticity of demand for Good B is therefore -0.3/0.75 = -0.4, which is closest to choice D, -11/17.

Table 52 Shows the Change in the Quantity Demanded for Good